JLT will “vigorously defend” a class action filed in the NSW Supreme Court on behalf of local councils that claim they paid excessive premiums.

Law firm Quinn Emanuel Urquhart & Sullivan says the action will be led by Richmond Valley Council. Six other local governments have registered their interest, including Parkes and Mid-Western Regional Council.

“We believe a vast majority of NSW councils have used JLT’s services and, as a result, may have overpaid on their insurance premiums, some for a number of years,” Quinn Emanuel Managing Partner Michael Mills said.

The class action alleges JLT breached general law and contractual obligations, plus fiduciary duties, in its provision of insurance broking and advisory services.

Mr Mills says many councils since leaving JLT have made substantial premium savings, often about 30-50%, indicating the company may not have acted in councils and ratepayers’ best interests.

The NSW action, supported by litigation funder Harbour, may be the first in a series of open class action proceedings on behalf of councils nationwide, according to Quinn Emanuel, which has previously flagged discussions in Victoria.

JLT Global Head Public Sector Leo Demer says claims raised by the firm in pursuing the NSW action are “utter and absolute nonsense”.

“It has absolutely no merit and we will be vigorously defending the action,” he told insuranceNEWS.com.au today.

JLT provides insurance services to more than 500 councils across Australia and has highlighted its strong track record in providing cover through mutual schemes.

“Every scheme produces an audited set of accounts that clearly define the significant surpluses sitting in those schemes for the benefit of members,” Mr Demer said earlier this year.

“Mutual schemes were created because councils in Australia could not buy any cover in the open market. The suggestion that councils have paid excessive premiums is unsupported by the facts.”

Richmond Valley GM Vaughan Macdonald says the council last year put its insurance out to tender and obtained a saving of 53% on the premium it had been paying.

“For that year alone, the saving was $300,000, and this has been going on for many years,” he said.

“In leading this action, I’m confident we will now be joined by many councils in NSW who face the same financial challenges we do to remain sustainable in providing services and infrastructure for our communities.”